Ottawa Struggles to Energize Tech Economy

Ottawa, like San Jose, Calif., at the heart of the Silicon Valley, has seen technology activity shrivel. In Ottawa, Nortel has laid off thousands; Newbridge was acquired by Alcatel SA of Paris; and there are major executive changes at Corel with major battles with the Ontario Securities Commission over a settlement relating to accusations of improper insider trading.

Ottawa has even suffered the indignity of Air Canada ending direct flights from that city to Silicon Valley.

And then there's the news that JDS is moving out and Corel is about be taken over by a group of San Francisco investors.

With that, a recent article says "the bloom finally appears to have gone off Ottawa's technology rose. Or, at the very least, the rose -- to continue the metaphor -- is in hibernation, waiting for a new spring."

Paul Bradley, a technology analyst at Dundee Securities Corp. of Toronto, said Ottawa rightfully earned the title of Silicon Valley North, but mostly for activity in the telecommunications and semiconductor sectors. "In the software and information technology services sector, it's really been centred elsewhere, such as Toronto or Montreal," Bradley said.

Despite the withering of Ottawa's highest-profile tech stars, the community's boosters point to many technology companies who can anchor a much-changed technology cluster.

There is Cognos Inc., for example, a maker of sophisticated business software with a market value of greater than $2.5-billion (U.S.) and more than $580-million in revenue for its past four quarters. Its stock is trading within a few dollars of its Nasdaq Stock Market 52-week high of $32.48.

Ottawa's semiconductor companies are also enjoying good times. Tundra Semiconductor Corp. has been among the best performers this year on the Toronto Stock Exchange.

Adam Chowaniec, Tundra's chairman, said the executives, engineers and other employees who have left those first-generation high-tech stars are already building new companies. "That is happening in spades here," Mr. Chowaniec said yesterday.

"The entrepreneurial spirit is stronger than I've ever seen it here. I don't think it's all over. It's part of the cycle."

Other Ottawa semiconductor players, such as Zarlink Semiconductor Inc. and Mosaid Technologies Inc., have also been reasonably strong performers and are considered by many analysts to have bright futures.

But other Canadian centres may now vie for the title of Canada's technology capital. Markham, Ont., for example, is the home to more than 500 technology-related companies, according to that town's city hall, including ATI Technologies Inc., Geac Computer Corp. Ltd., IBM Canada Ltd. and the Canadian operations for international tech stars like Sun Microsystems Inc., Motorola Canada Ltd., Apple Computer Inc. and others. Markham's Mayor Don Cousens has frequently said that his city, on Toronto's northeastern border, and not Ottawa should be recognized as Canada's technology industry capital. The Waterloo region, in Ontario's southwest corner, also has a strong technology cluster, anchored by tech stars such as software developer Open Text Corp., and BlackBerry maker Research In Motion Ltd.

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